Economists predict skyrocketing prices for services that were previously banned (1)


Latvian economists agree on the future growth of consumer prices in the country. In their opinion, the biggest jump in inflation is yet to come. Most of all, services that are limited or prohibited due to the pandemic can rise in price: dining in cafes and restaurants, trips abroad, etc.

Over the past month alone, fuel in Latvia has risen in price by 0.9%: diesel by 0.6%, gasoline – by 0.6%, autogas – by 5.2%. Over the last year, fuel in Latvia has become on average 25.1% more expensive, according to data from the Central Statistical Bureau.

In the first months of this year, the main factor for inflation in Latvia was the rise in world oil prices, especially compared to the very low prices in April last year. Fuel prices in Latvia in April this year have become almost a quarter higher than a year earlier. It is quite possible that in the second half of the year this jump will be reflected in the increase in tariffs for heat energy.

In general, life in Latvia has risen in price by 1.7% over the past year. Economists are confident that the rise in prices has not stopped, and by the end of the summer this figure will exceed 3%.

Once Latvians are allowed to travel, prices for travel services will also skyrocket. The rate of growth in rental prices is normalizing, which will have a significant impact on inflation: entrepreneurs will take advantage of the opportunities to compensate for the profit that was not received during the crisis. The impact of the low price base in the spring of 2020 will also be significant. In Latvia, inflation will continue to be higher than the average in the Eurozone.

The average consumer price level in Latvia will continue to grow in the coming months. The resumption of the work of cafes and restaurants should play a significant role in this, even if so far only on summer terraces.

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